The law and the regulatory agency will become vital to allow the growth of cryptocurrencies and protect investors in Dubai. Despite the concern of whether the regulation will be positive, there has been proof that a clear regulatory framework reduces risks and uncertainty.
The Prime Minister of the United Arab Emirates (UAE) and Ruler of Dubai announced that his government would regulate cryptocurrencies. He said they are building the regulatory foundations for developing crypto assets in that territory.
In that way, Dubai joins Singapore, the United States, the United Kingdom, and El Salvador regarding laws on cryptocurrencies. Those countries lead the way in creating regulations to control the use and mining of those digital assets.
The Regulation of Cryptocurrencies Is Crucial to Promote Their Development
Sheikh Mohammed bin Rashid, the ruler of Dubai, said that the UAE had enacted its first law to govern virtual assets. However, they have also established an independent regulator to manage the cryptocurrency sector. It will carry the name Virtual Assets Regulatory Authority (VARA) of Dubai.
The law aims to protect investors and design highly guaranteed international standards for the governance of the cryptocurrency industry. Other countries interested in those assets could follow in the footsteps of the United Arab Emirates.
The virtual assets law and the independent regulator will become vital to establish the position of the UAE in that sector. The Sheikh explained that they would allow cryptocurrencies to grow and protect investors in Dubai.
The authority will seek to organize the issuance and trade of crypto assets and grant crypto service providers a permit to operate.
In other words, VARA will supervise the growth of the cryptocurrency market concerning regulation, licensing, and governance.
Dubai Might Become a Cryptocurrency Hub
The UAE is a federation of seven emirates, and the financial powerhouse of the region, Dubai, has driven the development of the cryptocurrency market. Another emirate, Abu Dhabi, has also taken decisive steps to drive the sector. However, nobody knows how the legal framework on digital assets will affect the duty-free zones.
Furthermore, there is a common concern of whether the regulation will be positive for the cryptocurrency market. However, the answer to that question is not as simple as it seems at first glance.
There has been proof that proper regulation can enhance the development of a market like that of crypto assets. By providing a clear regulatory framework, the levels of risks and uncertainty will drop, factors that keep investments away.
In that regard, Binance CEO Changpeng Zhao praised the creation of VARA by Dubai. He also stated that regulatory clarity is essential for the cryptocurrency ecosystem to function correctly in that nation.
VARA will require residents to register before carrying out activities related to crypto-assets. In that way, the regulatory agency will control how people use their money.
The growth of the cryptocurrency sector is becoming increasingly evident worldwide, and the authorities of many countries are aware of that. For that reason, they create regulations to manage the development of cryptocurrencies and protect investors.
By Alexander Salazar
